Daley Company prepared the following aging of receivablesanalysis at December 31.
| | Days Past Due | |
| | | |
| Total | | 0 | 1 to 30 | 31 to 60 | 61 to 90 | Over 90 | |
| Accounts receivable | $ | 580,000 | | $ | 398,000 | | | $ | 92,000 | | | $ | 38,000 | | | $ | 20,000 | | | $ | 32,000 | | |
| Percent uncollectible | | | | | 3 | % | | | 4 | % | | | 7 | % | | | 9 | % | | | 12 | % | |
|
a. Complete a table to calculate the estimatedbalance of Allowance for Doubtful Accounts using aging of accountsreceivable.
b. Prepare the adjusting entry to record Bad DebtsExpense using the estimate from part a. Assume theunadjusted balance in the Allowance for Doubtful Accounts is a$3,800 credit.
c. Prepare the adjusting entry to record bad debtsexpense using the estimate from part a. Assume theunadjusted balance in the Allowance for Doubtful Accounts is a $300debit.
Part 2
Daley Company prepared the following aging of receivablesanalysis at December 31.
| | Days Past Due | |
| | | |
| Total | | 0 | 1 to 30 | 31 to 60 | 61 to 90 | Over 90 | |
| Accounts receivable | $ | 580,000 | | $ | 398,000 | | | $ | 92,000 | | | $ | 38,000 | | | $ | 20,000 | | | $ | 32,000 | | |
| Percent uncollectible | | | | | 3 | % | | | 4 | % | | | 7 | % | | | 9 | % | | | 12 | % | |
|
a. Estimate the balance of the Allowance forDoubtful Accounts assuming the company uses 5% of total accountsreceivable to estimate uncollectibles, instead of the aging ofreceivables method.
b. Prepare the adjusting entry to record Bad DebtsExpense using the estimate from part a. Assume theunadjusted balance in the Allowance for Doubtful Accounts is a$12,200 credit.
c. Prepare the adjusting entry to record bad debtsexpense using the estimate from part a. Assume theunadjusted balance in the Allowance for Doubtful Accounts is a$1,200 debit.
